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    7 Replies Latest reply on Aug 6, 2008 2:26 PM by Iwrite

    Partnership buyout

    ekatslat Newbie
      I am the co-owner of a small mobile food service start up. My partner and I each put in $10,000 (we won a business plan competition and we were awarded $25,000 as a team). We have been open for 7 months, and my partner wants to own the business on her own. We are paying the bills, but are just now starting to establish ourselves in the market. We will be growing significantly in the next few months. We also took on $46,000 loan together. I am in charge of branding the business, the logo, design, etc. Is it fair to ask her to take on the debt, get my investment back and money for the intellectual materials I leave with the owner? I want to get out of this without debt, and with some cash to start an art career. Orignially we were thinking of franchising the restaurant, so I am potentially missing out on more income down the way. I am looking for guidance so I don't leave this partnership with too little capital. Our exit strategy is pretty simple, if one person wants out the other owner has first oppurtunity to bid. I appriciate any advice.
        • Re: Partnership buyout
          LUCKIEST Guide
          Partnership buyout, Welcome

          A partnership exists when two (or more) persons join together and manage a business.

          A formal partnership agreement is usually recommended in order to address potential conflicts,
          (like an exit strategy). Did you have a lawyer help and prepare the partnership agreement??

          Do you have any written agreement??

          Tell me more, LUCKIEST
            • Re: Partnership buyout
              ekatslat Newbie
              We have not spoken to a lawyer. We developed our partnership agreement and exit strategy with a counselor from the Small Business Developement Center in our area. It states that we are 50/ 50 owners. We have both invested equal money.
              This is from our business plan:
              Co-Owners will have a partnership agreement drawn up addressing operating exit strategies in case either partner decides to leave the company. The remaining partner will have the first right of refusal. When the time comes, a third party (appraiser) will determine the value of the business. Initial plans call for building business for 5 years and then have valuation prepared. Partners would then determine whether to continue or sell.
              This is from our partnership agreement.
              8. Selling Out – If one general partner decides to leave the business they must offer their interest in the partnership to the remaining partner for the book value of the business plus 10%. If the remaining partner does not wish to buy the other half of the business, the departing partner will have the right to sell to a third party, but only with the approval of the buyer by the remaining partner. The buyout term will be no less than 3 years, and the interest rate will be the current prime market rate at the time the sell out is agreed to.

              She is not interested in sticking to our original timelines laid out for disputes. She gave me a week to decide if i wanted to buy her out or she buy me out, and she wants me out in 30 days. It's not logical, now I just want to get out, but I don't want to get taken advantage of.